Stockmarket Volatility

When attending meetings with leading fund managers earlier this month a consistent theme which came out was the potential for volatility in world stockmarkets. How true this has been particularly this week.

The problems in America caused mainly by subprime mortgage s and the resulting credit crunch have been well publicised creating knock-on effects in the UK market – in particular causing major difficulties for Northern Rock.

Hopefully we will soon see a resolution to Northern Rock's future with a private sector/government partnership deal coming about. In the interim uncertainty will no doubt continue to overlay our market.

Your portfolio is of course invested in a mixed range of assets, with your exposure to the volatility of equity markets balanced with more stable assets such as Gilts and Fixed Interest, so to some extent you are protected from the problems.

It is tempting for nervous investors to make short term moves out of uncertain markets and re-enter them when things are calmer. However, it is very difficult to time moves out of and back into markets and you could end up taking needless losses and missing out on significant gains.

Fidelity’s analysis of Stockmarket returns has shown that missing just the best 10 days’ of UK Stockmarket returns over the last 15 years would have resulted in a return 3% per annum worse than staying fully invested. Missing the best 40 days would have resulted in a return 8.9% per annum worse than staying invested.

Time, therefore, not timing, is the key to successful investment.

Your portfolio is constructed for medium to long-term investment and our recommendation is therefore to sit tight and ride out the storm.

We do, however, appreciate that you may have concerns over your investment and if this is the case we would be happy to discuss them with you if you would like to get in touch.

On a broader front, we would like to wish you a Happy New Year and look forward to the return of calmer times.

If you have any questions, please do not hesitate to contact us on 01772 326800
or at office@charter-partnership.co.uk.